Economy

Because of the scarcity of water, agriculture had been restricted to Asir and to oases strung along the wadis, but irrigation projects have reclaimed many acres of desert, particularly at Al Kharj, southeast of Riyadh, and Hofuf, in the eastern part of the country. Riyadh's desalinized water supply comes from a pipeline on the Persian Gulf. Products grown in Saudi Arabia include wheat, barley, dates, citrus fruit, vegetables, and livestock products. Agriculture is a growing economic sector, and the country is approaching food self-sufficiency. Manufacturing, which has also increased, produces metals, chemicals, plastics, pharmaceuticals, cement, and fertilizers. Minerals include phosphate, iron ore, copper, gold, bauxite, and uranium. Saudi Arabia has a growing banking and financial-services sector, and the country is beginning to encourage tourism, especially along the Red Sea coast. Mecca, Medina, and the port of Jidda have derived much income from religious pilgrims; the annual hajj brings about 2 million pilgrims to Mecca.

The oil industry, located in the northeast along the Persian Gulf, dominates the economy, comprising 90% of all Saudi exports. Major trading partners are the United States, Japan, Great Britain and other European Union countries, South Korea, and Singapore. Oil was discovered in Saudi Arabia in 1936, and the country is now the world's leading exporter. It contains about one quarter of the world's known reserves; 14 major oil fields exist. A huge petroleum industrial complex has been developed in the town of Al Jubayl, as well as at Yanbu on the Red Sea. There are refinery complexes at Ras Tanura and Ras Hafji on the Persian Gulf; oil also is shipped to Bahrain for refining. The oil boom after World War II led to the construction of the Al Dammam–Riyadh RR, the development of Al Dammam as a deepwater port, and the electrification of the towns. Schools, hospitals, and homes, particularly for the oil workers, have been built. Saudi Arabia, like other oil-rich Persian Gulf countries, depends heavily upon foreign labor for its oil industry; workers are drawn from Arab countries as well as S and SE Asia. The country began running annual deficits in the mid-1980s as oil prices declined and the government continued to spend heavily on armaments and social programs. Saudi Arabia entered a recession in the late 1990s and was forced to initiate spending cuts.

The Columbia Electronic Encyclopedia, 6th ed. Copyright © 2007, Columbia University Press. All rights reserved.

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